The latest figures published by the Department of Government Efficiency (DOGE) are staggering. $75 billion saved in two weeks. Some of the items they have slashed are astonishing, including payments to transgender musicals in Ireland, DEI in Serbia, or decolonization of curriculum vitae. This is a two-week result, so it should be applauded. However, there is a lot more that needs to be done.

The Congressional Budget Office (CBO) estimates that the United States will have a $6.1 trillion deficit, despite record receipts of $17 trillion, a growing economy, and declining unemployment. Furthermore, they expect an annual deficit of $5.6 trillion in the 2026-2029 period.

As Scott Bessent has correctly stated, the United States does not have a revenue problem; it has a spending problem. The CBO expects annual outlays of $23 trillion in the 2026-29 period.

What do we know?

Inflation is rising, but it has nothing to do with tariffs. It has everything to do with the Fed’s policy and the Treasury’s uncontrolled spending.

The Core PCE Price Index, which excludes food and energy, rose by 0.2% this month and remains stubbornly high at 2.8% annualized. The headline PCE Price Index increased by 0.3%, the first 0.3% monthly increase in eight months. This has pushed the annualized increase to 2.55%, the highest in seven months.

Obviously, this inflation trend has nothing to do with tariffs but with the fact that government spending soared 10% in 2024, and money supply growth is at a two-year-high.

Many market participants appeared astonished to learn that Von Der Leyen and Scholz in Davos were steadfastly pursuing the policies that have severely damaged the EU. However, this is typical bureaucratic behaviour.

In a predictable move, EU bureaucrats have chosen to exploit the new Trump administration as an external enemy, rather than seizing the opportunity to unleash the immense potential of their economies. Bureaucrats do not care about results; they care about bureaucracy.

The two pillars that support the entire modern monetary system—that central banks have a clear mandate for price stability and that they are independent from governments—have crumbled over time.

For years, people have questioned the independence of central banks. However, from 2020 onward, this independence has virtually vanished. A monetary authority that does not consider monetary aggregates in its policy is effectively abandoning price stability as a target.

If we look at the Fed’s actions since 2020, we can see how it has prioritized government debt over price stability. Initially, the Fed accelerated the money supply to its highest level in decades, enabling significantly higher spending during a lockdown. Afterwards, the Fed maintained aggressive easing policies despite rising inflation, announcing that price increases were “transitory.” Four years later, government spending has risen by $2 trillion above 2019 levels, and inflation is persistent despite the U.S.’s record energy production and competitive advantages.